Case Name Espiritu et al vs Petron Corp, KPE

Topic Criminal Liability

Case No. | G.R. No. 170891, Nov. 24, 2009
Date
Ponente ABAD, J.:
Doctrine Corporate officers or employees, through whose act, default or omission the
corporation commits a crime, may themselves be individually held answerable
for the crime.

RELEVANT FACTS
Respondent Petron Corporation (Petron) sold and distributed liquefied petroleum gas (LPG) in
cylinder tanks that carried its trademark "Gasul." Respondent Carmen J. Doloiras owned and
operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the
whole of Sorsogon. Jose Nelson Doloiras (Jose) served as KPE’s manager.

Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and
distributing LPGs in Sorsogon but theirs carried the trademark "Bicol Savers Gas." Petitioner
Audie Llona managed Bicol Gas.

On August 4, 2001 KPE’s Jose saw a particular Bicol Gas truck on the Maharlika Highway. While
the truck carried mostly Bicol Savers LPG tanks, it had on it one unsealed 50-kg Gasul tank and
one 50-kg Shellane tank. Jose followed the truck and when it stopped at a store, he asked the
driver, Jun Leorena, and the Bicol Gas sales representative, Jerome Misal, about the Gasul tank
in their truck. They said it was empty but, when Jose turned open its valve, he noted that it was
not. Misal and Leorena then admitted that the Gasul and Shellane tanks on their truck belonged
to a customer who had them filled up by Bicol Gas. Misal then mentioned that his manager was
a certain Rolly Mirabena.

Because of the above incident, KPE filed a complaint for violations of Republic Act (R.A.) 623
(illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of
trade marks) and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293). The
complaint charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and
several John and Jane Does, described as the directors, officers, and stockholders of Bicol Gas.
These directors, officers, and stockholders were eventually identified during the preliminary
investigation.

Subsequently, the provincial prosecutor ruled that there was probable cause only for violation of
R.A. 623 (unlawfully filling up registered tanks) and that only the four Bicol Gas employees,
Mirabena, Misal, Leorena, and petitioner Llona, could be charged. The charge against the other
petitioners who were the stockholders and directors of the company was dismissed.

Dissatisfied, Petron and KPE filed a petition for review with the Office of the Regional State
Prosecutor, Region V, which initially denied the petition but partially granted it on motion for
reconsideration. The Office of the Regional State Prosecutor ordered the filing of additional
informations against the four employees of Bicol Gas for unfair competition. It ruled, however,
that no case for trademark infringement was present. The Secretary of Justice denied the appeal
of Petron and KPE and their motion for reconsideration.

Undaunted, Petron and KPE filed a special civil action for certiorari with the Court of
Appeals but the Bicol Gas employees and stockholders concerned opposed it, assailing the
inadequacy in its certificate of non-forum shopping, given that only Atty. Joel Angelo C. Cruz
signed it on behalf of Petron. In its Decision dated October 17, 2005, the Court of Appeals ruled,
however, that Atty. Cruz’s certification constituted sufficient compliance. As to the substantive
aspect of the case, the Court of Appeals reversed the Secretary of Justice’s ruling. It held that
unfair competition does not necessarily absorb trademark infringement. Consequently, the court
ordered the filing of additional charges of trademark infringement against the concerned Bicol
Gas employees as well.
 Since the Bicol Gas employees presumably acted under the direct order and control of its
owners, the Court of Appeals also ordered the inclusion of the stockholders of Bicol Gas in the
various charges, bringing to 16 the number of persons to be charged, now including petitioners
Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M.
Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan
A. Mirabuna, Juanito P. de Castro, Geronima A. Almonite, and Manuel C. Dee (together with
Audie Llona), collectively, petitioners Espiritu, et al. The court denied the motion for
reconsideration of these employees and stockholders in its Resolution dated January 6, 2006,
hence, the present petition for review before this Court.

RATIO DECIDENDI

Issue Ratio

W/N the No.

stockholders and
members of the Bicol Gas is a corporation. As such, it is an entity separate and distinct from
board of directors the persons of its officers, directors, and stockholders. It has been held,
of Bicol Gas are however, that corporate officers or employees, through whose act, default or
liable under RA omission the corporation commits a crime, may themselves be individually
623 held answerable for the crime.

The "owners" of a corporate organization are its stockholders and they are to
be distinguished from its directors and officers. The petitioners here, with
the exception of Audie Llona, are being charged in their capacities as
stockholders of Bicol Gas. But the Court of Appeals forgets that in a
corporation, the management of its business is generally vested in its board
of directors, not its stockholders. Stockholders are basically investors in a
corporation. They do not have a hand in running the day-to-day business
operations of the corporation unless they are at the same time directors or
officers of the corporation. Before a stockholder may be held criminally
liable for acts committed by the corporation, therefore, it must be shown
that he had knowledge of the criminal act committed in the name of the
corporation and that he took part in the same or gave his consent to its
commission, whether by action or inaction.

RULING

WHEREFORE, the Court REVERSES and SETS ASIDE the Decision of the Court of
Appeals in CA-G.R. SP 87711 dated October 17, 2005 as well as its Resolution dated
January 6, 2006, the Resolutions of the Secretary of Justice dated March 11, 2004
and August 31, 2004, and the Order of the Office of the Regional State Prosecutor,
Region V, dated February 19, 2003. The Court REINSTATES the Resolution of the
Office of the Provincial Prosecutor of Sorsogon in I.S. 2001-9231 (inadvertently
referred in the Resolution itself as I.S. 2001-9234), dated February 26, 2002. The
names of petitioners Manuel C. Espiritu, Jr., Freida F. Espititu, Carlo F. Espiritu,
Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim Roland A.
Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P. De Castro,
Geronima A. Almonite and Manuel C. Dee are ORDERED excluded from the
charge.

Short Summary

 KPE was the exclusive distributor of Gasul LPGs in the whole of Sorsogon
 KPE discovered that Bicol Gas was refilling and distribution Gasul tanks/containers.
  KPE then filed a complaint for violations of RA 623
 Provincial Prosecutor ruled that there was probable cause against the 4 Bicol Gas
Employees ( ang ga operate and distribute mismo).
 KPE appeal to the CA to include the owners.
 CA ruled that since employees acted under the direct control of its owners, CA ordered
the inclusion of the stockholders (bringing up the number of defendants to 16 –herein
petitioners)
 Petitioners filed for review in the SC

W/N the stockholders and members of the board of directors of Bicol Gas are liable under
RA623

No.

For further explanation see page 37-38 sang book under Liability of Corporation for Torts.